FALL 2025
• Recurring revenue, especially in contract-driven
businesses
• Cross-selling opportunities with their current
customer base
• Scalable operational systems that can be
transferred or absorbed seamlessly
For example, a small plumbing company generating
under $2MM in annual revenue might seem like a
modest lifestyle business to an individual buyer.
However, for a larger regional contractor struggling
to find licensed plumbers, the team and service
coverage provide immediate value, justifying a
premium price and closing fast.
HOW TO IDENTIFY STRATEGIC BUYERS EARLY
Many brokers wait until a business is listed to begin
targeting strategic buyers; a mistake that can limit
deal potential. Instead, identifying these buyers
should be part of the pre-market process.
Key strategies include:
• Industry mapping: Research competitors,
vendors, and adjacent service providers
within a 100-mile radius. Identify who
is expanding, raising capital, or hiring
aggressively.
• Referral networking: Leverage connections
with bankers, vendors, and other brokers
who may have insights into active
acquirers.
• Buyer segmentation: During buyer
screening, ask whether prospects currently
own a business, operate within specific
industries, or have completed acquisitions
before. This helps filter and prioritize
strategic buyers early.
STRUCTURING DEALS FOR STRATEGIC FIT
Strategic buyers often approach deals differently
than financial buyers. While SBA-backed individuals
are constrained by lender requirements, strategic
buyers are more flexible, provided the deal aligns
with their business goals.
Common deal structures include:
• Cash-heavy offers to move quickly and bypass
financing delays
• Minimal transition periods if they already have
the infrastructure in place
• Earn-outs linked to performance metrics
related to integration, not just revenue
It’s essential to manage seller expectations regarding
these dynamics. Strategic deals tend to close faster
and cleaner, but they also tend to be pragmatic
rather than sentimental. Sellers who are emotionally
attached to their business may need guidance on
adapting to a buyer focused on operational efficiency
rather than legacy preservation.
MARKETING TO STRATEGIC BUYERS:
TELL THE RIGHT STORY
A standard Confidential Information Memorandum
(CIM) or Confidential Business Review (CBR)